tv Returning Stolen Assets CSPAN November 3, 2014 6:28pm-8:01pm EST
>> good morning, everybody. welcome. i'm a senior advisor here at the csis. it's good to see lots of friendly faces in the audience. for those of you new to the headquarters, i know some of our panelists, this is their inaugural visit, welcome. after the session, we will be having a reception. we hope you can join us. welcome, again. we are being joined via wide stream on internet as well as c-span. keep in mind you're on tv as well as we are. but we're very excited to not only be hosting this pooanel
entitled assets. i could not imagine a better set of experts to speak to the range of past, current and future i e issues and challenges. let me set the stage, in part, because we've gathered about two years ago. in what was happening systemically in terms of dealing with high-end corruption. these issues are not new, of course.
news a these are issues and regimes that will be with us for a number of years. what we want to do today is talk about an international community in the u.s. on dealing with asset recovery. in particular, in the wage of the spring and some of the disappointment disappointments, in the wax of the transition in ukraine and in light of some of the recent cases in particular bought ear e here many the u.s. so that's what we wanted to do today. have an open discushion e cushion. we'll speak for about an hour and then open it up for questions. to my left is ambassador
zelwegger, a very good friend of mine. legal advisor in essence in charge of the asset recovery. to his left is the section scheef. jay is the general on asset recovery for the u.s. government. running now for the department of justice just in the past couple of weeks. jay has deep experience. i won't give you his deep background because it's em barszing how impressive it is. but he is the u.s. expert on these issues.
to his left, you'll have to forgift e give me his last name. the center piece of the world ba bank's efforts in technical and asset issues. a long standing profusely on these issues and a world recognized expertment you do have three of the world's experts. i'm here to be a moderator and hopefully will drive the discussion in an appropriate way. from your perspective, what has
gone wrong? and what are tissues at large i the international community. >> that's a good question. a lot has happened. the most important thing is that asset recovery is now very much on the forefront of international news. switzerland started to be proactive. for a long time, a lot 06 cases were swiss cases. we did so because we were under pressure. not only did we have one person,
but we talked about the groups. 30-40 in these countries. so the cases are much more complex. the most important change is there is a recommendation. also in the financial sectors, so to speak in the north that we have to work together. . we have several international recoveries that are initiatives to cooperate among all requested and requesting jurisdiction, which means all the partners involved, we've never had that in the past. we've always tried to solve cases bilaterally. what we do at the time, we all work very koesly together with the support of the world baeng.
and i think that is an extremely important developmented. and now they come to your point that we have not made the progress we hoped for. i disagree with that. we shouldn't have hoped for more progress two years ago. and when i don't remember exactly whether we hoped for more progress. that's still one of the remaining charges. if you look now at some of the progress we've made, within 2011, within 3 1/2 years. sending back two-thirds of the funds we have to tunisia.
we have rapid procedures, the quickest case in our history took us five years. we were efficient because we had a cooperation with nigh year ya in that case. now, in tunisia, we solved the case in three years. i think that is also due to an international cooperation. we could solve the case because we have a close cooperation with tunisia, and, also, because we worked with other jurisdictions. and in order to collect all the information that we need, that's the best approach. so i am pretty confident for two reasons. asset recovery is not a topic on the international agenda: and, second, international cooperation has increased over the past two years. >> you're talking about an issue right now. it's not seen as just an issue on effective countries.
>> can you speak to the shift in the u.s. approach and maybe take e take us through this latest case which has gotten so much attention with the seizure, the malibu mansion and the michael jackson statues and the rest. >> sure. i think it's important to recognize that there's been a shift, but it's probably been a shift more in emphasis than in desire. you know, the efforts to recover stolen assets on the u.s. side, as it goes back many years. to the 90s. i think what changed about four or five years ago was a concerted effort on the part of the u.s. government to devote resources and expertise in a core of prosecutors in these type of cases.
the attorney general going on four years launched the recovery initiative. i think that was a recognition that at least with the legal system that we're working within the united states, asset recovery is a judicial procedure. those aren't 5:00 sets that can lead to recovery of also sets. it prevents assets from flowing to the affected countries. but we can't use that as a mechanism and then return those stolen assets. so in the u.s., that's done through our forfeitture laws. predom nantly, we're dealing with situations where the individuals who are responsible for misappropriating these also sets might be outside of a criminal process.
that is either a legal matter or a practical matter. so we focus on the united states of civil forfeitture where we have to tie the asset to the crime. you have to tie the asset to the crime and that requires sophisticated financial investigations where we can trace money that emanated from a corrupt act to the asset. proving that case takes specific everyday. the crime seen, if you will, is the crime scene in which it occurred. you may have to get witnesses
from third party countries who might be willing to talk to you. you might have to get financial records. a cooperation that's improved tremendously over the past few years. we still have issues in financial records that can be admitted in court. i think with the rise in some of the data policies, they have valuable aspects from a personal privacy point of view. they make it difficult at times to get the financial information we need to prosecute these cases. and then you have to put it all together and produce a judge that these are valid cases to be brought and should result in a forfeitture judgment. and then you've got some of the politics around it. you know. people question whether forfeitture is a useful tool. for me, i would say yes. it's one of the most valuable tools we have to attack corruption.
and criminal conduct. all of that is a long way of saying that we couldn't do this in the ugs with people doing it par time. and we have a lot of prosecutors who ared otr types of cases. what we're talking about are really sometimes criminal organizations that masquerade as governments but are really exappropriating also sets for the betterment of themselves. so you need the skills of an organized crime prosecutor, courtroom skills. so you 23450needed to get sophisticated, trained people to do this:.
the people that we have to go up against are some of the best of the best. right now, the department has devoted testimony prosecutors to the clep tok ra sill unit in my section who work exe exclusively on these cases. we can now respond to events on the ground as opposed to going back 15, 20 years and trying to piece together the puzzle. that makes a huge difference. i think really what's changed is a reck nigsz e in addition of what it will take to win these cases. it takes a while. a number of years ago, pretty
much fairly soon after the initiative was announced. but we're dealing with a government that was not cooperating, with evidence that was largely low kated in 2 country. financial records that had to be obtained and pieced together through a web of complex shell corporations that hid the true ownership of these. at the end of the day, assets that we might not be able to get our hands on. at the end of the day, the settlement is that we managed to sishlly forfit or acquire through other means the value of all of the assets that we've the potential of getting.
this is an understanding that, if for some reason, comes back into the country, we will reserve the right to go after it. but i think we shouldn't under-ist under-estimate how difficult a job this is. it doesn't do us any good if we acquire these goods in a way na vie lates that due process. that takes time. it can fris rate you, i can tell you, from the perspective of a prosecutor. but then there's publy lick wile-in. there's le jit ma sill. we lose some, we win some.
i think that, in and of itself, is a very important lesson to countries emerging from different types of political circumstances. >> we'll come back for some interesting lessons from that, of course. talk to us about sort of the evolving world bankroll because the star initiative is relatively new. and sort of talk to us about that 679 and talk to us, particularly from your perspective, what you see in the landscape. more resours. what's your perspective on all of this? >> thank you.
i i'm i'll just give you a bit of a background. real really, to put in practice chapt ere 5 of the united nation's convention. chapter 5 is on asset recovery and lays down the principle that countries will return the proceeds of corruption back to the financial centers where we turn back to the countries that have settled from corruption. and we do that in a number of ways. we started off very much, i think, on the more policy-level advocacy level, trying to put asset recovery on the map. did a big, asset recovery handbook.
trying to do a bit of advocacy, as well. to breakthrough those barriers, trying on the topic which we just touched on right now to push the epnvelope on beneficia ownership and make the countries aware of the misuse being made. and, again, that's not a new issue. deserves high lighting of the misuse both on shore and off-shore jurisdictions. so we started very much trying to sort of push policymakers. i think in the wake of the arab spring and now after the events in the ukraine, we become more focused, also, on really working drektly with countries together. building capacity.
how one reaches out. what are the typical conditions for mutual assistance. legal assistance, how do you draft a mutual legal assistance, really basic step by step stuff. and also -- and the arab forum on asset recovery is one of the examples of that. and as was the ukraine forum on asset recovery. trying to provide a bit of a venue, a bit of a neutral venue, where requesting and requested states can meet and discuss the issue of trust is very fundamental, i think, to successful asset recovery.. the issue of trust is very fundamental, i think, to successful asset recovery.the issue of trust is very fundamental, i think, to successful asset recovery. issue of trust is very fundamental, i think, to successful asset recover issue of trust is very fundamental, i think, to successful asset recoverissue o fundamental, i think, to successful asset recovery. certainly if you look the at the issues just after the arab spring there was perception in
some of the countries, well, if these financial centers were happy taking the proceeds of our former rulers, why should we trust them now? why would we work with them now? why would they help us? so trying to, on both sides, act as an honest broker and bring the parties together i think has been an increasing part of the role of the stolen asset recovery initiative. and so it's with that sort of perspective when you ask me to highlight some of the issues. if you look at the landscape i think was your term of asset recovery, it's through that lens that we look at it. first point to the ambassador's point, absolutely, the attention given to asset recovery is -- is spiked enormously. various factors i think contribute. there is the united nations convention against corruption and that spree into force and i think that's done a lot. i think the financial crisis has
helped particularly fiscal authorities zero in on the abuse of shell companies for all sorts of purposes. and i think that is in no small measure contributed to the push on beneficial ownership. and i think civil society. i see some civil society here as well has contributed in no small measure. so i think for a variety of reasons we are -- we are now seeing increased attention at the political level and at the t-20 and elsewhere on the issue of asset recovery. that's not just words, that's not just paying lip service. that's also putting in place the sort of task forces that jay was talking about just now. the unit is an excellent example. the unit that ambassador zellweger referred to earlier. you didn't refer to it in so many board are words but it was what you were pointing towards. in the uk, in the met police, funded by the way for the department of international
development which i think is a very interesting funding model. where you have a number of dedicated police officers -- this is then the uk example -- specifically focusing on the proceeds of foreign corruption in the london finance system. those sort of things and sometimes it's in a formalized asset recovery unit, sometimes it's just about breaking down the boundaries between parts of government that used to maybe work too much in silo, you know. the financial intelligence unit maybe wasn't really connected to the anti-corruption unit, which in turn may be not have been plugged into what the regulators were doing. i think breaking down those boundaries between different parts of government is very much something that we've seen and it's translated into legislative action as well. you spoke about the sanctions regulations, asset freezing
legislation that many countries have adopted. so a holding measure. eu has done that, switzerland has done that. just after arab spring. a list of these persons, freeze their assets now. so it's not a judicial freeze in the context of judicial action. it's an administrative freeze giving the countries time to prepare their judicial action. i think that sort of innovative legislation is happening. the civil forfeiture legislation that i think in america has been around for a very long time but to many other countries is still relatively new. you see that -- i wouldn't say proliferating but you see countries taking up those sort of legislations. so what we call nonconviction-based legislation where you connect the asset to a crime. typically on the balance of probabilities.
won't go into too many technical details but any life way, looking at legislative action to make it easier for a country to get to stolen assets, the proceeds of corruption. i think those are all very positive, positive developments. of course, there are still challenges. if we look -- at the start of an asset recovery initiative we have databased the asset recovery watch where we try and track international asset recovery efforts. and i think at this stage, i looked at it yesterday, i think actual returns so far, we're at $4.9 billion. i think we're at $27.7 billion in frozen assets. and so let's say we're in total at maybe $8 billion or a bit above.
if you look at the whole landscape of asset -- of corruption, $8 billion is maybe not a whole lot. but ambassador zellweger made a very good point. maybe we put too much burden on the system of asset recovery. maybe we're expecting too much to happen in the context of asset recovery, which is, as jay just said, after all, a judicial process. you soon overburden it and put all your hopes in we can do it that way. maybe there are other things that should be looked at as well. one of the challenges that comes up, and it slightly relates to the point of civil asset recovery that jay made earlier, precisely this point of linking an asset in a financial center to a particular crime in a corrupt or autocratic state. certainly if you've had regimes in place for 20, 30 years, how are you going to do that?
how are you going to say this bank account or this particular house was bought with assets that we can trace back all the way back to a bribe paid -- that's extraordinarily -- that's an extraordinarily high level of -- you know, that's a very high burden you're putting on a country to prove that. so i think where we would like to see some more development is on that question of linking the asset to the crime, and maybe more systems of equivalent value conversation. confiscation. that is to say, i have proved that there was a crime to the tune of "x" billion, and i will take now an asset owned by the same person even if that asset is not -- i cannot prove the criminal origin but i'll still be allowed to take it.
so some flexibility on that front i think is necessary. and to the earlier point of are we putting too much expectation, too much hope on asset recovery, are we expecting too much to come from asset recovery. i think there are certain subtleties which, in a culture of corruption such as existed in for instance in tunisia, there's a very interesting report in the world bank publishes a couple of months ago called "all in the family." and it talks about the way in which the benali family really had a finger in every pie in the country. and so when you talk about a foreign investor into tunisia, he doesn't have to be told in so many ways than you have to pay
the son of the president, or the son-in-law, so much money. there is a subtle way of suggesting that would it be a good idea if you took him on your supervisory board. and so there are lots of instances like that where you really have state capture, which -- you know, maybe we shouldn't be looking to the asset recovery system to solve those issues. because that is -- there's not a clear intent that you can say, that's where the corruption took place. so, you know, those are the sort of issues. or other things like parliaments really rubber-stamping legislation for the ruling family. so that it was -- de jure completely legal in a minister simply awarded a contract to the president's firm, because under the law he would be allowed to do that. because the parliament had given him the discretion to do that. sorry, yes.
>> before i forget i was going to raise a point on that. there is a paradox in bringing these cases which is that the more dictatorial the country is, the more difficult the case is to prove precisely for that reason. because it may be perfectly legal to have conflicts of interest or even overt expropriati expropriation. you think of a 16th century france. if you're louis xiv, you own all the property. what's the corruption if you give it to somebody who you know? so paradoxically, some of our bigger successes come in countries where it's an issue of corruption, not necessarily cleptocracy, the true meaning being where a family or clan or somebody has expropriated the tools of state for their own benefit. it becomes much more difficult to prosecute. >> jay, wouldn't that be an instance where the u.n. convention on corruption would help you? because it does set the
standard that is applicable to all the countries. because there is the ratification is pretty universal. i think that should give you -- >> absolutely. i think it's in a sense every country want toth appear legitimate. just by signing on to it, you have hooks to do it. the question becomes can you prove to the judge's satisfaction that that is the law of the land? so absolutely those are the arguments we made. i just wanted to point out a paradox that existed in kind of our enforcement regime. >> yes. there is a point about dual criminality which is really what you are talking about. to what extent you would be able so, for instance, fall back on more general civil service hics where you can say, well, a minister should act in the public interest and clearly here that was not the case. so it becomes much more difficult from purely legal point of view to make the case that was a condition of international cooperation is mutual.
it's dual criminality. it has to be a crime in your country and in that other country. that's why it's so difficult. but just a few more points on what i think the challenges are. we talked earlier about the preventive system. and the extent to which -- yes, it's very good if we can be successful in our asset recovery efforts, but that's all ex post facto. it would be so much better if we could really focus our efforts on making sure that that money never ended up in the financial system in the first place. and so that is i think where due diligence obligations by banks are very important. and i think maybe something is -- i hope something is changing in the culture of banks. there were some very interesting reports by the swiss regulator
and by the english regulator, still at the time the fsa, now the fca, to the extent to which banks in those countries what had, or not, implemented due diligence obligations for so-called politically exposed persons. certainly the english report is very hard-hitting and actually very unbureaucratic in its language. it's very clear that quite a number of banks were deliberately miscategorizing certain clients as low risk, whereas they had enough information to suggest that the opposite was the case. so i think on that preventive side we still have some work to do. i think also focusing on the enablers, the lawyers, the accountants, the trust and company service providers who tend to set up these constructs of shell corporations. and if you talk to many financial centers, particularly to the investigators in those countries, they'll tell you the same thing.
they say, on it -- it's actually quite a small defined group of the same lawyers, the same accountants, the same trust companies that we see in many places.lawyers, the same accoun the same trust companies that we see in many places. but it's very hard to get them on the hook for the crime. and they often -- not very often, but often you're after the big fish. you're after that corrupt official in country "x." and it may be just a waste of your resources to go after those enablers. because in the big picture, they are the small fish. but actually, in the big, big picture, there is such a small category of those, maybe it's worth focusing more on that. so i think those sort of challenges still remain. i don't want to end on a negative note. i think really we have come a long way. if you've worked on something as
obscure as beneficial ownership for a long time, and then two years ago you hear david cameron talk about beneficial ownership at the g-8 summit, that's extraordinary. that's something that was really something for a few nerds in ministries. suddenly becomes this big issue. is absolutely extraordinary, as is the fact that there are so many people here today. i mean this debate is clearly generating some interest. so i think those are hopeful signs. i'll leave it there. >> emil, wonderful points. i do want to come back at some point to this notion of thinking about changes in how we address these challenges of different modes of corruption in cleptocracy. governments republican blend region legitimate and illegitimate activities. state-run enterprises and such. it gets very hard to quantify and to track and then ultimately engage in a stolen asset
recovery effort. so how you think about -- as you were saying, sort of modalities of the legal paradigm and the tools we use and what those should look like is very interesting. i also want to come back to your point about prevention. because i think we've talked about this often. stolen assets is an issue of not just corruption in law enforcement, but of development and economic reform. very important in terms of where developing countries are going. so i want to come back to that. just to sort of give the audience a sense of, you know, what these kinds of cases look like. valentine, i was wondering if, especially given your historical view, your role in switzerland, can you give us a sense of the kinds of cases that are still under way now and that you see as still prominent in the swiss financial and legal context? just give us some examples so the audience gets a sense of what's happening in the real world of stolen asset recovery. jay, i'm going to come to you with the same question.
>> let's start with the marcos case. as i mentioned, the marcos case started in '86 when president marcos was toppled. the case is not really finalized. we sent back $680 million in 2002. but the philippines then had to enact a law that would allow the victims of the human rights violations of the presidency of mr. marcos to be -- to have a right to have access to these funds. and the political problem the philippines faced was that they had to recognize that the presidency under president marcos, there were very systematic human rights violations. that took a long time and that statute could only be enacted this february. so we will have in a month's time, we will have a conference in manila to, so to speak, to mark the end of the marcos' affairs. and remember, that took 28 years. a similar case, jean claude
duvalier who recently died was also toppled in '86, the same year. the case is still not finished. why isn't it finished? i think that is also a phenomenon of increasing concern. oftentimes these dictators, they really wreck their countries. which means once they lose power, their countries are no longer in a position to really prosecute and to be a partner in mutual legal assistance. take haiti, take zaire, congo, take other examples. the problem that we have is the very person that is responsible for the demise of the economic institution of its country would then also be its first beneficia beneficiary. and that is what happened to us in the congo in the mbuto case. the congolese institutions were weakened to a point where we could no longer cooperate with
them. so we had to release the funds. because as you said, jay i think made a very convincing case, we have to go through judicial procedures. we cannot rely on kangaroo courts. so our judges said, look, we cannot just confiscate the funds. as long as we don't have evidence coming from congo, because the evidence had to come from congo, there was nothing we could do. and in the end it was the mbutu family that was a beneficiary. and that led switzerland to enact a new statute that is actually for these cases, would allow us to confiscate the funds in switzerland without any cooperation from the country concerned. and that is exactly what we did. and i come back to the duvalier case. it is called the lex duvalier case. we enacted with a view to the case not to lose it. we lost one case. we don't like to lose. we enacted that law and we won the case in the swiss supreme court last september, september 2013. we are now in the process of
sending back the money to haiti. and perhaps we will touch on this issue. because i would also be interested how you are going to deal with that in the context of the obian case. that is always a challenge. because we -- you know, by being active on asset recovery of the restitutional funds, there is also some kind of an expectation in our countries that we're not just writing a check, putting it to the mail office, and send the money back just to see how it evaporates again. so we have to find ways how we can ensure that it will be spent in an accountable manner. >> so these are two cases. and you have all the ongoing cases in the wake of the arab spring. emil, i'll come back to you, i want to ask you a question of what are some of the modalities of the return of assets to get to precisely valentine's concern, not just throwing money back into a corrupt environment to be misused again. we'll come back to that. jay, can you talk to some of the cases that you and the u.s. are dealing with and maybe give some examples from obion as well?
>> we of many investigations going on all over the globe. i think it's public so i can speak about things like the ukraine where there's an active effort to do it. unfortunately, i can't speak to specifics about pending investigations because i wouldn't want the money to go fleeing somewhere else. >> can you give -- >> what i do want to do is talk a little bit about what we've been able to do since bringing our resources together. we've had a wide variety of cases that have become public over the past few years. we've had cases against the former president of taiwan chen du won. the former president/dictator of south korea. which i know is longer in the tooth but we -- and i think that's an example of how quickly things can go. we instituted a civil forfeiture action against funds that were located abroad. so this was jurisdiction we had over money not located in the united states.
but located in various jurisdictions, including the uk, elsewhere. but we were able to obtain a final order of forfeiture with respect to over $400 million of those proceeds. there's still $120 million, which is being litigated, which will have to go through the judicial process. we were able to do that quickly. and are now in the process of enforcing those judgments in foreign courts so that we can actually get our hands on the money and then consider how to repatriate it. and finally obiang. i think with the obiang case shows is that in some ways we have to be pragmatic and practical in how we deal with these cases. i think one could take the view that, you know what we're going to do is litigate this, these cases for 20 years, till the end of time. without a sense of what the ultimate purpose is.
which is to recover assets and return it for the benefit of the countries and people affected. and i think in that case, we took what i think would be considered a fairly aggressive posture against a sitting official, i should say, who became a sitting official, but somebody who was very well connected. and litigated it. and you know, had various twists and turns in the litigation, which is all public and people can read about it. but then had to make a practical decision as to we have jurisdiction over a set of assets in the united states. which we were pretty confident we could win on. but which could take another three to four years to get a final order of forfeiture by the time the litigation, the civil discovery came into place. and assets which, in all frankness, we probably bore little chance of getting our hands on. an airplane which after litigation was commenced, was
transferred into the title of the state of equatorial guinea. it posed problems as to whether any government would assist us in seizing that asset, even though we had legal arguments as to why it wasn't a valid transfer, but would pose problems. assets that were located in equatorial guinea and we were receiving absolutely no cooperation. in our assessment the settlement that we were able to enter into was able to acquire the entire value of the assets that we had a realistic possibility of getting our hands on in a realistic time frame. so rather than waiting for another few years to actually try to bring this case to closure and try to recover assets. and i think those are, quite frankly, the kinds of judgments we're going to have to make if we want to devote our resources. we could do legislative changes. but those are slow -- those are more slow in coming. i think some of the issues that were raised in terms of can we tweak laws to eliminate tracing requirements, et cetera, take
time to consider, because you have to consider whether it fits within our traditions, within other things. so those changes can happen but they're a little bit longer. so in the meantime i think we have to be you know -- i'm a prosecutor and a litigator and i try to be sort of on the grounds practical. i think we need to figure out how we get within the tools we have the money into our possession legitimately and then try to work on repatriating. >> just real quickly, jai, for folks aren't familiar with the obn case what actually was forfeited? >> so in the end we were able to forfeit the malibu mansion, which is -- i'm not seen sure -- my experts would have to tell me, remind me, what was the actual -- but it was an enormous mansion in malibu. we were able to forfeit the value of the property that was located in equatorial guinea with respect to the michael jackson paraphernalia. so paraphernalia that he had purchased with corrupt funds.
>> including life-size statues. >> including life-size statues, and then we were also able to forfeit cars and other things of value. i should add that there are cases pending in other countries, france most notably, and if you do happen to travel to paris you'll notice that there's a mansion that's an entire city block in a very nice part of paris. and there are still ongoing cases. nothing that we did affects or immunizes anybody prospectively. doesn't affect other jurisdictions that might want to go after additional assets. and so from that perspective, i think it's an effective tool or effective way forward in terms of how we balance due process rights. and the necessity of judicial process on the one hand, with trying to do the best we can within our system of laws to acquire things of value, and then go to the next step. >> emil, hem ask you one
question before we get to the question of recovery and models for recovery. how do you see sort of the ukraine situation going from your perspective? and are there other cases, either bubbling or emerging, that are of interest to you from the world bank's perspective? >> i think one of the things that was very interesting in the react -- response to ukraine goes to the earlier point made by valentine is the immediacy of the international reaction and the breadth of that number of countries that immediately jumped to and said, okay, we're going to check to see what we have here. i think another thing that is very interesting is the role of civil society in actually digging up the evidence, and going through those bits of paper that had been strewn in the palms and elsewhere around the mansion and trying to piece that together and playing such
an important role in preserving valuable evidence for others to work with. i think those are some of the things that really stand out. other things are more i'd say run of the mill. i mean, the enormous use of shell companies in lots of jurisdictions. i think that's something that you see in other cases, as well, and the difficulties associated with getting behind and proving ownership and control over those entities, that is probably more common. to the point made earlier about how to return assets, i think we have one example, and valentin, please correct me because you've been much more closely involved in that than i have. but in the context of kazakhstan. the monies located in switzerland pursuant to an
action by the u.s., i think $60 million more or less, and the question -- this was awhile ago -- and the question was how does -- how are we now going to return those assets back to kazakhstan without effectively giving them back to a country that -- and to corrupt people who can then do with them what they want? and the modality that was found was to set up a foundation, the voter foundation, in which the u.s., switzerland, kazakhstan, world bank, and civil society as well, played a role in deciding how those funds be used. and something similar, we hope, and we have been given indications and there have been stories in the press as well, will happen with money that was recently returned by
liechtenstein after 14 years of litigation to nigeria. finally, through all the processes of first instance appeal, appeal to the european court of human rights, eventually case closed, $230 million returned a few months ago. there again the minister of finance of nigeria who was very instrumental when she was still at the world bank in setting up the stolen asset recovery initiative has indicated that that money will go through a separate entity, a foundation, or an ngo, where the world bank will play a role, where civil society in nigeria will play a role for specified purposes, youth development is the umbrella that it's under now.
so there are ways in of dealing with returns of assets and ensuring the transparency of use of those assets. >> valentine, switzerland in trying to sort of be more aggressive in this field, you've been leading the charge, you're about to host the third forum on arab asset recovery. can you talk about "a," what you see coming out of that conference that's going to happen the first week of november? and secondly, what you see the role of switzerland, not just for purposes of dealing with what may be in the swiss banking system, but internationally in this space? i'm interested in your sense of where things are headed from the swiss perspective. >> let's first address the arab forum on asset recovery, that's a venture that we do in close
cooperation with the world bank, and the g-7 countries. we do not expect a specific result. you know, that it would change the world. what we want to do is to provide a forum to see, to look back now at the last year since the last forum, to see what has worked, what hasn't worked. where do we have to put our focus on? and i think it's very clear the focus will have to be put on an increased cooperation. we have had great successes, and again, i think tunisia is a very encouraging example. and in the tunisian case, probably there will soon be a return of a lot of the funds. probably not compared -- if you look at the global sums that were involved, but it will be a very important restitution. it's a bit more difficult in the case of egypt, given the country's development. and again, also, in egypt, very encouraging signs of an increased cooperation, and we could then also go in to a
restitution mode soon. and i think that would be the topic of the conference. now, as to switzerland's role, we have received a mandate so to speak in the last u.n. conference against corruption, because i think all of us slowly come to realize that if you have now this great instrument that is the u.n. convention against corruption, but it's not sufficient just to put it in your statute books. because i give you an example. if you have an international obligation to engage in mutual legal assistance, there are so many ways you can do that. if we receive, for example, a request from country "x," we look at the request, we can say, whoa, sorry, that request is not sufficient, back to sender. we return it to the sender. that's one thing. we could also say, look, sorry,
this is not sufficient, but if you put it like this, and if you do that, and if you then turn it around, we can then answer. and that -- you will say that's a little detail, but i think that is really the decisive factor. do you cooperate, and the latter example isn't so much of cooperation, or do you just apply your statute books? so it's like we come in to new dimension. we have the law in the statute books but now we have to breathe life into them. we've got a mandate by the parties to now look what are the lessons learned in our past practice. and we have organized a conference in january in switzerland to -- with a group of countries and experts who have been actively involved in these cases to see what has worked. and i think, jai, you mentioned the importance of trust. trust is absolutely essential. in resolving the cases.
trust, fine, okay. but how do you establish trust? how do you do that? i remember when i first traveled to tunisia in 2011, they told me exactly as emile indicated, they told me why should i trust you? why should i believe you? you took our money in the first place, now you come and tell us you are going to help us. and i had to explain, look, i'm a government official. i'm not a banking official. so the banks took. the government never agreed to that. we are fighting corrupt money in switzerland. so you have to establish trust. but then you have all these issues, like for example in some countries you're able to build relationship. but in a post-revolutionary society often you have all these subsequent changes of government. you take the labor libyan case which is very familiar to you. i don't know how many governments they had since the downfall of gadhafi. so each time you have to start a new relationship.
what we want to do and that's what we did in this conference with switzerland, look into the practices. how do you do that? and what then are also important lessons? i just give you another example. it's the timing of a mutual legal assistant request is absolutely essential. if you send it too early you may wreck your case. if you send it too late, you may not even have a case. so you really have to choose the right moment. how do you do that? all these lessons, put them together. we put together a document that we will submit next year to the conference, i hope with the help of all countries involved and certain lit world bank. and then to see -- it's a bit like asset recovery 2.0. what is the next dimension? how can we really now make it even quicker, more efficient? because i think these remain the main challenges. and i fully agree with the examples that the two of you mentioned. of course we have to go through judicial proegd. because the whole credibility of
the process relies on that. but we have to get better. because it does take too much time. >> you introduced this thing, but let me ask you this. how much resistance have you felt from the banking community, whether in switzerland or otherwise? emile talked about the onus put on banks in a preventive context to know their customer. to engage in heightened due diligence for political exposed perpendiculars known as peps in the field. is there resistance from the banks to say look, it's not our job, and certainly i heard this in the wake of the arab spring, banks saying, look, on one day these are good guys, and the countries that we're supposed to be doing business with, and then the next day they're toppled regimes and we're supposed to be hunting their assets. and so aren't we, the banks, getting caught in the political winds here, in an unfair way? have you felt resistance given what are fairly aggressive steps on your part? >> look, the world is changing. and even the banks are changing. and we felt it directly.
there was, as you said, there was some -- not a lot, but there was some opposition in switzerland. because we froze the funds in the wake of the arab spring extremely quickly. we were the first to freeze them. the banks criticized us for doing what they said was an isolated act. now the european union came a bit later. but what the european union did, they announced their freeze. i don't know if that's very clever. because if you announce a freeze, that's an invitation you just take out your money. so you have to be quick. the swiss government was quick. but it got criticized by the bank. what happened in between, and that's very interesting, because we're preparing the statute, because the swiss government so far has always acted on a kind of an emergency power that is given to it in the swiss constitution. the deal with parliament was that, okay, the parliament accepted what the government did, but it said you have to submit a statute, a draft statute to have, you know, the
whole range of activities of the government in this field debated by parliament. we're now in the process of doing this in parliament. so we drafted a statute that would really -- is a comprehensive, like how to do manual of everything we did so far. and the interesting thing is that the banks are fully behind it. because they have realized that the reputational risks for a bank, and this is what has changed, the reputational risks for banks is just too high. and to come to the ukraine in context, when the swiss government froze, and that also is a progress. for the first time we froze together on the same day as other financial centers. that would have been absolutely impossible only two years ago. this time, we coordinated among some centers of the european union came just a few days later. but when some of the banks contacted me, some of the big banks in switzerland told me, look, we have no problems with that because we went at the ukrainian business awhile ago.
it's just too hot. and i think that's an indication that the reputation risks are increasingly recognized by banks. and i'm sure that this also applies to other countries. and just let me make a last point. i think we shouldn't underestimate a huge change that is taking place over the years. if you look back 20 years ago, corruption was accepted as a fact of life. well, in some countries you just have to deal with it. that's part of the landscape in that country. in some of the jurisdictions, it was possible to deduce bribes from your taxes. not only is that no longer possible but it's an offense to bribe in other countries. that means that corruption today is seen as a phenomenon we can fight. we just have to keep on fighting it, and hopefully we will one day be able to erase it. but that brings me to the last
point, i promise. i think we should continue to stress the importance of prevention. asset recovery is like the fireman. if everything else has failed, then we have to identify the funds and send them back. but we should really emphasize on prevention. we shouldn't get these monies in the first place. >> jai? >> i just want to build the last thing valentin said, that's the attitude of the financial institutions. another part of what my section does is we bring actions against financial institutions for violations of what we call in our country the bank secrecy act, and also for other violations. and you do hear sometimes from financial institutions, you know, where we're being whipped by the political winds but what they're focusing on are fact of ofac blocking violations. but the pep regulations are completely separate and those are ongoing obligations that financial institutions have to make sure they know their customer.
know the source of the income. and i think that what has changed is that banks are now focusing on reputational risk, but also on i think trying to figure out if there's a business model out there that allows them to know their customers in a way that a local community bank does. the difficulty for a global financial institution is you don't have face-to-face relationships with your customers. you may be marketing to a global audience. and i think what needs to change is it needs to become part of the dna of the financial institution. where they're not just seeing this as an obligation, they're responding to a check the box exercise, but it becomes part of what businesspeople do. it's not just a compliance person telling the businessperson, you know, you need to follow this rule. because they'll follow it. they'll find a way to check the box and they'll find a way to circumvent it. the question is, when a businessperson onboards a client, are they asking the
right questions to know what their business is, to know who these people are, when a transaction happens do they understand what the source of that income, et cetera. and that really does have to work its way into the very business model of a bank before we don't see these major actions and other things against them. and i think some of them are starting to get the message that that's what they need to do. they need to stop thinking about this as something that's imposed from without, and something that they need to do as part of their daily operations. >> before we open it up to the audience, i have one more question, maybe emile and jai can just sort of answer quickly. are we seeing new modologology methodologies for regimes or cleptocrats to move money, to hide money, you know, the art world, and you know, purchasing of high-end art certainly in the
context of the islamic state we've seen articles in op-eds about the use of antiquities in the sale of antiquities to raise money. are we see any new modalities or tipologies in the case that are of interest? emile? >> i think you might see, as you mentioned, new classes of assets just because that happens to be available and that's something that can be investigated. but if i think of our good friend bob mazer who was an undercover investigation guy from customs. and he went undercover in the cali cartel in the '90s. and did extraordinary work gathering information undercover for two years, wrote a book about that called "the infiltrator" which is currently being turned into a film. and he did obviously a lot of work then as a customs agent and still now does work as adviser. and has his own firm, but still does some investigations. and he has this magnificent
slide where he juxtaposes what he saw in the beginning of the '90s, and what he sees today. and why it is magnificent is because it is exactly the same. the modalities are exactly the same. so, yes, the class of asset might have changed. and now there are other things they can lay their hands on. but the way that money is being moved actually, you know, and every now and then new shell companies and new types of companies are involved, okay. because legislation has changed, okay. so there is some tweaking there. but the underlying is pretty much the same. the separation of money in different jurisdictions and making sure that there is huge legal distance i would say between an asset and the ultimate beneficial. and that is still the underlying purpose. and that will happen regardless. so i think in that sense, it's quite interesting to see how much things have stayed the same. >> jai?
>> i would say the same thing. i think that money launderers today are very much like portfolio managers. there's an entire illicit world that services organized crime, cleptocrats, and there's a nexus between organized crime and cleptocrats in countries. it's the substrate in which organized crime works and they work off each other and there's a financial structure that supports them. and i think we in law enforcement sometimes tend to -- when a case arises we say, ah, that's a new mode of doing things. then when another case arises, oh, there's a trend in this direction. i think what you have to recognize is, there's a sophistication out there that's the same as the sophistication on the legitimate side. these are people who are trying to make their transactions look like legitimate transactions so they can place cash in the system, they can layer it and distance themselves from the illegal conduct and ultimately
integrate it into the economy. and that's the reality. i think that's right. a less colorful example is, you know, before a talk i gave a little while aguy read the 2005 treasury risk assessment. and i was shocked. because the seven things that they identified there are the exact seven things that we're looking at today. and that's the reality. i don't think that's something to think we're failing. i think that's the reality. just because crime doesn't exist anymore, doesn't mean we failed in fighting crime. crime exists because it's something that emerges from human nature. greed is part of human nature. and there are just realities out in the financial system that can be exploited. they're going to be exploited by different people in different ways and they're going to manage their assets just like a legitimate person will manage his or her assets. and that's all that's happening. they're using different modalities to move things
around. i think we just need to be careful of shifting all of our resources to horses because we found out that the mexican cartels are now using horses to launder their money. or, you know, to par bonds because abacho was using them. we just need to be limber and realize we need to know -- to understand the financial system the way it actually works and distinguish legitimate conduct from illegitimate conduct. >> wonderful. let's now open it up for questions. we're going to have a microphone, i believe we've got microphones, yes. so wait formal microphone. identify yourself, please, and then ask us a single question. we want to get as many as possible. while we're identifying the first question we'll go to this gentleman over here. i just want to thank the swiss embassy for their support. they've brought valentin here. valentin has been the catalyst for these events for us. i want to thank him for spurring us to do these, thank you very much. yes, sir. >> would you like me to stand?
>> yes, please. >> my name is sandy sirk, i'm a lawyer in washington, and i have a question for mr. ramaswamy but also others. before i ask the question, i need to disclose that i'm serving as a volunteer pro bono counsel for two ngos that have filed comments in regard to the repatriation of the abache assets. one a nigerian ngo, and one the u.n. coalition -- the u.n. convention against corruption coalition which is sort of a offshoot of transparency international in berlin. the u.s. civil forfeiture statute requires the justice department to cooperate fully although that may not be the statutory language, with the state department in making decisions on the method of repatriation. i wonder if you could elaborate a bit on that, and particularly identify who some of the players are at the state department that
you would work with, in the case such as abache. and secondly, if you could elaborate a bit on whether there are any opportunities for a more fulsome explanation of how the department mechanically would work on repatriation issues, and whether views from the public are welcome in the context of a court case. that's a long question and i apologize -- >> let's get to the answer. >> thank you. >> first of all, i'll start with the last one, that's the easiest. my view, and i think it's shared by everybody i work with, we're public servants. of course we accept comments and suggestions from the public. that's what we do and that's what we should do as good stewards of the public trust. having said that, we are also -- we work within the confines of statutes that govern what forfeited assets can be used for. we do work very closely with the
state department. the list is too long. i don't think i could give you a laundry list of who we work with. but there are many people over there. there are people in budget, there are people in the more programmatic areas that we work with. and one of the challenges that we have is how do we use the authorities that are given to us in our forfeiture statutes to fund certain specific categories of things? and how do we work with the state department, others, to identify, one, recipients who can receive the funds, and who we are authorized to give the funds to. and two, who will exercise a degree of oversight to make sure that the funds don't get recycled back into corruption or don't fuel corruption in and of themselves. i think there are different models that exist out there. i think the reality is that i'm not sure that one model is going
to work in every case. in the case of the boda foundation the funds were in switzerland, they were legal, real realities, so a foundation was created in that instance. and i think everybody will agree it was a very effective way of getting money back in a responsible way. and the tag line that i like to use, i'm actually borrowing from the actual supervisor who leads the group, but responsible repatriation is what we want to focus on. in obiang there are a number of different mechanisms we're going to have to use. part of the money was forfeited. part of the money will be going to an as of yet undesignated entity, and there's a very specific procedure in place to determine who that entity will be. but of course, we welcome views. i can't say that these decisions are easy and everybody will be happy with the decisions that are made.
but we are trying to do the best we can within the legal confines of what we're given. >> right here. mr. kumer. >> many thanks to the panelists for an excellent presentation. i have basically two questions. i'm ahmed kumar. my first question to ambassador zellweger is, the government has been having a long dialogue with the swiss government on the recovery of black money or unaccounted wealth from india. now to what extent are the stringent bank secrecy laws in switzerland an impediment to not only recovery of those assets but also the disclosure of ownership information of those assets? that's one. the other to emile and to jai is to what extent are -- is the recovery of terrorist assets in terms of their legal and judicial challenges different from recovery of assets
belonging to peps? thanks. >> sure. why don't we answer this -- >> the answer is very simple. there's no banking secrecy if we talk about illegal acts. so if we get a request from a prosecutor in another country, there's no banking secrecy. we have very stringent customer rules. so we're quick in being able to give the information. we do have, as you say, we have -- we have had long discussions with the indian government, but that is for tax evasion. and tax evasion used not to be criminal offense under swiss law. that is changing. we are now adapting to international standards. but that is at the heart of the dispute. and there is agree and there is agreement with the indian government as to what exactly will have to be disclosed. and as you just indicated there is a new indian government that we now hope that we will be able to resolve the case much quicker
than we could do so in the past. >> jai, emile, on the question of terrorist assets versus peps assets? >> sure. from the u.s. perspective the money laundering and forfeiture laws that govern terrorist assets are the same ones that govern other types of conduct. the key is that you have to prove that it's one of the predicate acts. terrorism is, in fact, a predicate act for forfeiture. so -- and you know, we've brought cases against terrorist assets. in chicago there's a public case where we are forfeiting al qaeda assets in connection with the civil forfeiture action. the challenges are what you would expect. it's getting evidence. oftentimes the challenge in the national security arena is that much of the information is classified. it may be classified from the
u.s. it may be classified abroad. if it's abroad you then have to get permission from the foreign government to declassify that information so that it can be used. there might be a concern over what we call gray mail, which is a tactic that is sometimes used to try to force the government to disclose information that's not relevant but that would cause the government to dismiss its case if it were forced to do so. on the criminal side there's something called the classified information procedures act which requires the government to turn over and declassify any exculpatory information. but there's a process in place where a judge can look at information in camera, meaning privately, to make that determination. so that you avoid the situations. on the civil side there's no analogous structural thing and so it's a little bit more free flowing. sometimes we make arguments that cipa should apply, you know, has sort of criminal component.
we sometimes make arguments it's state secret which are much harder to make. but those are the constellation of challenges that really emerge. ultimately in the judicial process we need evidence, not information. and how do we get evidence of national security issues as opposed to what might be criminal issues? and that's it. but the structure is the same. we go after those assets and i think there's some notable cases where we've succeeded in doing so. >> yeah, and emile, very quickly. >> yeah, that would be the same for most -- i mean, those rules apply internationally, i.e., terrorism is considered to be a predicate for money laundering as such just as corruption. most of the debate when it comes to terrorist assets is not actually about confiscation of those assets but the freezing and the designation of terrorists, which is not a confiscation process. just to be -- and that's where a lot of the debates surrounding the legitimacy of that, the designation process itself,
whether it's in conformity with due process ends up. that's where there's a very big difference with politically exposed persons where you really -- when you start confiscating, you know, you have an act there whereas that designation process is supposed to be an administrative process. and if the freeze is held on for 10, 20 years doesn't it become very close to, in fact, de facto confiscation? >> gentleman in the back? >> steven donahue. thank you, juan, very much for hosting this. any time that a ruler steals money, he's taking it away from schools and hospitals, and infrastructure of his own people. a question for jai. following on the intelligence versus law enforcement information question, there's also a tension between the law enforcement aspects of this and the diplomatic aspects of this. how does the interagency work when you've got a ruler in
office that is cooperating on a diplomatic front, but is stealing the money for his family? >> what i can honestly say is that our decisions of whether to bring a case are tactical decisions, are prosecutorial decisions. even in those instances, and we do have the obiang case being one. certainly we want to make sure that there's information to the extent that we're not precluded from sharing that information because of investigative necessity or legal requirements like grand jury secrecy. we don't want interagency partners to be surprised by what we're doing. but they're completely separate. it doesn't matter to me, to anybody in the leadership of the justice department, and i think quite frankly, even on the diplomatic side, nobody in this process wants to see the process
but in this case, diplomacy doesn't play any role at all. we have strict separation of powers. and if the prosecutors decide to go against anybody we will just have to accept it. we do accept it. >> yes, sir. right here in the middle. >> peter harpry, i'm an nelgth analyst. i'm wondering if when all else fails if the white hat hackers
might not be able to resolve these situations at an infinitely cheaper cost. i'm wondering who might authorize that, what element of the command authority, could it be done by the worker bees? i'm wondering what the nexus between treasury and the white hat hackers might be. and i'm wondering how the banks might respond when a decrepit asset suddenly disappears off their accounts. do they look the other way? or do they make a stink? >> the issue of covert and cyber capabilities. does someone want prosecutor so i have some appreciation for what you're talking about. luckily i'm a prosecutor and a law enforcement agent and we don't engage in that because it's useless to there's enormous problems. there's a position of not having to deal with it.
i think folks who are on the intelligence side can probably speak to it more. bass i can't use any of it in a judicial proceeding. >> more probably, the issue of the private sector, you're talking about the parole of civil society. i certainly have experience with the private sector side of that recovery. what is the role of the private sector in this. either to gather evidence, or to be a catalyst in other ways, what's your sense of that? maybe not in the cyber context, but otherwise? >> i think we -- i think we're seeing increased participation and interest by the private skek for, it's always focused on the financial institutions, that's for obvious reasons. i think where many countries are still facing problems, is on
the, as i mentioned in the beginning, the enablers, the lawyers, the accountants, those advisors, who in some countries and in the european union are subject to anti-money laundering obligations and have to report transactions. but in other countries, a absolutely not, the u.s. being one of them, and actually as far as i understand, correct me if i'm wrong, it's unthinkable here that the lawyers would be regulated for anti-money laundering purposes. i think there, there's a little bit of a divide between europe and america on the other side. >> one last question, i want to be respectful of everybody's time. sir, in the very back there. very back. >> thanks for this forum. i would direct the question to the doj official. >> your name, sir? >> my name's kenneth, i'm an attorney here in washington. i just wanted to get your thoughts on a senate report a
while back about atiquo, from nigeria, who's probably going to contest in this next election for president, for money laundering and all that. i'm just wondering why no action has been taken against him being atiquo. >> honestly i can't confirm, deny or say anything about any particular case. rook, i think it's an open question as to what our reach ask in a whole bunch of cases. i think on the law enforcement side, we recognize that we have limited resources. i don't know the specifics of that investigation or noninvestigation or what you're referring to. but if we had evidence, we would
be investigating it and we would pursue it. but i don't have anything about that particular investigation. >> there's a senate report that the resources that came in were actually -- it was a money laundering investigation and that was the conclusion of the senate report. >> under. i guess from our perspective, there's just a difference between the information evidence that's in the report on what's admissible evidence in a court of law, and so i can't comment on anything specific that's going on, but that's where when you ask why has nothing been done, a lot of it, it could be that gathering admissible evidence just takes a longer amount, more time than collecting information of other sorts. there could be a whole host of other explanations, but i don't know specifically what situation is there. >> this is great.
hope you found this educational, enjoyable and certainly hopefully sets the stage for another discussion, hopefully not in two years, maybe next year, talking about asset recovery 2.0. please join me in thanking our panelists and thank you all. through campaign 2014, cspan has brought you more than 130 candidate debates across the country in races that will determine control over the next congress. and this tuesday night, watch cspan's live election night coverage, to see who wins, who loseses and which party will control the house and senate. our coverage begins at 8:00 p.m.
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